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M/s. Rajasthan Explosives and Chemicals Ltd. Versus The JCIT, Bharatpur and M/s. Rajasthan Explosives and Chemicals Ltd. Versus The DCIT, Bharatpur

Disallowance of carry forward of loss - Held that:- Since no claim of set off of loss is made by the assessee in this year the action of AO in rejecting to allow carry forwarded is not tenable as it preempts the future quasi-judicial powers of the AO who has to actually set off of the loss if and when there are profits. Therefore, the remarks/ findings of the ld. AO denying claim of carryover of earlier losses and unabsorbed depreciation are expunged. The legality of claim of set off will be con .....

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rders of the ld. CIT(A), Alwar dated 11-02-2013 u/s 154 and dtd. 01-03-2013 u/s 143(3) of the Act for the assessment year 2001-02 respectively. 2.1 In ITA No. 481/JP/2013, the assessee has raised following ground. Action of ld. CIT(A) in confirming the action of the AO in not allowing carry forward of loss of ₹ 2,90,78,830/- is unjust, illegal, arbitrary and against the facts and circumstances of the case. 3.1 In ITA No. 481/JP/2013, the assessee has raised following grounds. 1. Action of .....

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28-12-2011 declaring loss of Rs. (-) 2,90,78,830/- which was processed u/s 143(1) on 22-03-2002. Since the return has been filed beyond the specified limit for filing the return u/s 139 (1), the aforesaid loss was not allowed to be carried forward to the subsequent assessment year. Assessee filed application u/s 154 of the I T Act claiming it as a mistake and for its rectification. 4.2 Apropos other appeal, the AO while processing the return u/s 143(1) rejected assessee's claim for carried .....

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udit for the F.Y. 97-98, 98-99 and 99-2000 was pending. Therefore, Hon'ble Bench of BIFR has directe4d to the new promoter at page no. 8 para No E(II) as follows:- To allow the new management to file various returns/ forms and any other related documents viz. income tax, central excise, customs, provident fund, ESI, register of companies, department of explosive and any other central government authorities etc. on or before 31-12-2000 ad not to impose any interest penalty, fine etc. on accou .....

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evidence of yearwise permission given by BIFR for the above assessment year. After considering the assessee's submission and the BIFR order dated 22-11-2000 brought forward losses cannot be allowed in view of Section 139(3) of the I.T. Act, 1961 because loss in any previous year under the profit and gain of business can be carried forward only if the return is furnished within the time allowed under sub-section (1) of Section 139. The assessee failed to furnish return within the time allowed .....

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cular dated 31.08.1990 had been withdrawn vide circular No. 683 dated 08.06.1994. I have considered the order of the Hon ble BIFR dated 22-11-2000 and 06.09.2001 by which the date for filing various returns before Income Tax and other Central Government Departments mentioned in para- 6E(ii) has been extended from 31.12.2000 to 31.12.2001. However, on going through the order of the Hon ble BIFR dated 22-11-2000 and the sanctioned scheme in BIFR case No. 34/92 circulated with said order it is note .....

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any to carry forward and set-off of the investment allowance and unabsorbed depreciation / unabsorbed losses for all the years during which the revival scheme is implemented, the assessment years to which the scheme is applicable has not been mentioned separately. Considering that the cut-off date of scheme has been stated as 31.03.2000, it is held that the scheme would be applicable up to FY 1999-2000 i.e. upto AY 2000-01 and it would not be applicable for AY 2001-02 which relates to the FY 200 .....

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ejected in scrutiny assessment also as the return of income was filed beyond the prescribed limit u/s 139(1)of the Act. 4.5 Aggrieved, the assessee preferred first appeals wherein the ld. CIT(A) on merits upheld the order of the AO passed u/s 143(3) by following observations. 11.The ground No. 11 is against not allowing carry forward of business loss assessed by the AO. 11.1The AO has observed that the assessee has filed return of loss on 28-12-2001 declaring a loss of ₹ 290,78,830/-. Sinc .....

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h was rejected by the AO. On this issue further appeal has been filed before this office. It has been submitted that the Income Tax return was filed as per provisions of the Scheme sanctioned by Hon ble BIFR on 22.11.2000 and as per its order No. 18(4)/l/B.III/BIFR/Mon/2001 dated 06.09.2001 and carry forward of loss assessed should be allowed. 11.3 I have considered the assessment order and submissions made by the AR. I have also considered the order of the Hon ble BIFR dated 22.11.2000 and 06.0 .....

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eliefs and concessions have been provided for the period prior to 31.03.2000, since the cut-off date as per para-6 of the Scheme is 31.03.2000. The relief has been worked out in light of the closure of the company from 1st t June 1998 till 31st March 2000 and the change of management of the company by inclusion of a new co-promoter Captain K.S.Solanki. Although the scheme provides for allowing the new management to file various returns before Income Tax Department, and to allow the company to ca .....

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cordingly, it is held that the appellant can not take shelter of the above said orders of the Hon ble BIFR and the return filed on 28.12.2001 can not be said to have been filed as per the time limit specified u/s. 139(1) of the Act since due date of filing the return u/s. 139(1) was 31.10.2001. The order of the AO, in not allowing the carry forward of assessed loss for AY 2001-02, is upheld and this ground is dismissed. 4.6 Aggrieved, the assessee is before us in both the appeals. 4.7 The ld. Co .....

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he company filed a reference in the BIFR and was declared Sick by BIFR in 1992. A scheme for the rehabilitation of RECL was sanctioned by the BIFR on 3-05-1994 under the Sick Industrial Companies (Special Provisions) Act, 1985. The scheme was subsequently modified on 10-05-1996. The modified scheme also failed to revive the company. Thereafter, the offer has been received through advertisement by BIFR for taking over RECL. After comparing the offers, a fresh scheme by way of change of Management .....

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the sanctioned scheme on 31-03-2000. The cost of the scheme estimated to be ₹ 820 lakhs was proposed to be financed by fresh promoter s contribution in the form of equity capital ₹ 570 lakhs, realization of dues from Coal India Ltd. ₹ 50 lakhs and internal accruals ₹ 200 lakhs. The scheme inter alia provided for payments to, and certain reliefs and concession form, Govt. of India, Govt. of Rajasthan, RIICO etc as mentioned in clause 6DGovernment of Rajasthan and 6E-Govt. .....

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quired to file various return with different Govt. agencies by December 2000 as envisaged in the scheme. Since the accounts would be finalized by Sept. 2001 and thereafter adopted in the AGM, he requested that the date of filing of such return be extended upto Dec. 2001. The Bench has considered the said request and directed that the company would file a formal request with the Board for extending the date of filing of various return with different Govt. agencies upto 31-12-2001. Accordingly, a .....

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ject matter of appeal No. 481/JP/2013. Thereafter the notice u/s 143(2) was issued and scrutiny assessment was completed after making some disallowances and reiterating the stand of rejection and carried forward of losses. 4.9 The ld. Counsel for the assessee contends that claimed carry over losses which included two type of claims. (i) Carry over business losses. (ii) Carry over unabsorbed depreciation The ld. Counsel for the assessee pertinently mentioned that for assessment year 2000-01 also .....

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is order dated 11-02-2013 by following observations. 4.3 I have considered the order of the AO and submissions made by the AR. The appellant has filed return of income for AY 2000- 01 on 28.12.2001 although the due date of filing the return u/s. 139(1) was 30.11.2000. The AO has issued an intimation u/s. 143(1) of the IT Act dated 22,03.2002 with returned total income of Rs. (-) 237,75,700/-, and amount pavabie/refundable as nil with a note that ilic above loss is not allowable id be carry forwa .....

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furnished within time allowed u/s. 139(1). (ii) As per CBDT, New Delhi circular No. 576, the assesses company is not entitled to the benefit of extension of date of filing return of income. The assesses has not filed any specific evidence of year-wise permission given by the BIFR for above assessment year. I am inclined to agree with die AR of the appellant that the AO has erred in following the CBDT New Delhi circular No. 576 since this circular dated 31,08,1990 had been withdrawn vide circula .....

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ed for the period prior to 31.03.2000, since the cutoff date as per para-6 of the Scheme is 31.03.2000. The relief has been worked out in light, of the closure of the company from 1st June 1998 till 31st March 2000 and the change of management of the company by inclusion of a new to- promoter Captain K.S.Solanki. The scheme provides for allowing the new management to isle various returns before Income Tax Department, and to allow the company to carry forward and set-off of the Investment allowan .....

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t would have and over-riding effect over provisons of the Act. Therefore, the return filed fbr AY 2000-.01 on 28.12.2001 is to be cnsidered as filed as per the sanctioned Scheme and the order of the BIFR. Accordingly, the carry forward and set-off of unahsorbed depreciation/ unabsorbed losses, investment allowance etc. has to be allowed in terms of para-6E(iv) of the sanctioned Scheme and BIFR order dated 22.1.2000, Considering the above discussion, it is held that the AO was not correct in reje .....

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allow necessary relief to the appellant. The ground No. 1, 3 & 4 are allowed on above terms. (13) The second ground regarding not providing proper opportunity of being heard had become iniructuous and academic in nature in view of the relief provided above. The same is rejected. 4.11 The ld. Counsel for the assessee contends that this order of the ld. CIT(A) allowing carried forward of losses in assessment year 2000-01 has been accepted by the Revenue as no further appeal is filed. The facts .....

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has been accepted by the Revenue, there is no justification on the part of the ld. CIT(A) in not following his own order of the same date on the same facts and circumstances of the case. In assessment year 2001-02, it has been clearly held that the provisions of Sick Industrial Companies (Special Provisions) Act, 1985, the Rules or Scheme made under the said Act would have an overriding effect over the provisions of the I.T. Act. On the same date in other order, this categorical rule finding ha .....

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ase of Lodhi Property Co. Ltd. vs. CIT, (ITAT Delhi Bench) 36 SOT (2010) 128 (ITA No. 2267/Del/2009) wherein the Bench has observed as under:- 13. Section 24(3) of the Act, 1922 is analogous to section 157 of the present Act under which the Income-tax Officer has to notify to the assessee the amount of loss as computed by him. Therefore, the present Assessing Officer determining the loss shall only determine the quantum of the loss incurred in the present assessment year and shall notify the sam .....

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Hon'ble Supreme Court in the aforesaid case of Manmohan Das (supra). We, therefore, hold that the Assessing Officer's order is erroneous and prejudicial to the interest of revenue to the extent the Assessing Officer has made an observation that loss to be carried forward. The expression to be carried forward mentioned by the Assessing Officer in his assessment order is undoubtedly rendering the assessment order erroneous and prejudicial to the interest of revenue. The issue whether the .....

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y, was justified in setting aside the assessment on the above issue to be made afresh after giving opportunity of being heard to the assessee. 4.13 It is further contended that in any case the claim of unabsorbed depreciation is to be allowed irrespective of belated filing of the return. Reliance is placed in the case of CIT vs. Govind Nagar Sugar Ltd. (2011) 343 ITR 13 wherein the Hon'ble High Court has observed as under: - 16. We have already noted above that Section 32 deals with the diff .....

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r than unabsorbed depreciation and there was a time limit within which loss can be adjusted, whereas in the case of unabsorbed depreciation there is no time limit and further that under the statute there is a separate identity with respect to unabsorbed depreciation though at the time of computation, it becomes a part of loss. 17. From the above, it comes out that the effect of Section 32(2) is that unabsorbed depreciation of a year becomes part of depreciation of subsequent year by legal fictio .....

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en accepted by the Revenue. We see no justification in ld. CIT(A) s order for the assessment years 2000-01 and 2001-02 passed on the same date i.e. 11-02-2013.By elaborate finding, the ld. CIT(A) has held in assessment year 2001-02 that Sick Industrial Companies (Special Provisions) Act, 1985, the Rules or Scheme was incorporated to revive the Sick Companies and bring from mess of losses and rigor of various other Acts. This fact has also not been disputed by the ld. DR. The order of the ld. CIT .....

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stency of the stand of Revenue on same facts and circumstances enunciated. In view thereof, we hold that ld. CIT(A) ought to have followed his order in A.Y. 2001-02 and allowed assessee's application u/s 154 of the Act being the mistake pointed out therein. Thus the appeal of the assessee in ITA No. 482/JP/2013 is allowed. 4.16 Adverting to appeal on merits also we find merit in the assesse s reliance on Delhi ITAT judgment in the case of Lodhi Properties Ltd. (supra) holding that the presen .....

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